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February 2018

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Global apparel brands are making a strategic entry in the South African retail sector. The companies are launching their stores in the country to gain knowledge and test the local markets, which might further fuel their expansion plans in the rest of the continent.

International brands are continuously on the lookout for emerging markets to beat the slow growth in developed economies. The African continent offers a huge opportunity for retailers worldwide and South Africa has long proved itself as an idle feasible option for garment companies that are interested in expansion.

South Africa’s retail sector is an eclectic mixture of both traditional and modern retailing systems. Due to the rapid urbanisation and the rise of the modern consumers the country has become a lucrative investment area for retailers worldwide. The demand for better products and services has increased because of the availability of disposable income amongst middle class South Africans.

However, the retailers who are opening outlets in the cities of South Africa are likely to adopt a calculative expansion approach because of various reasons, such as lack of real estate‚ high currency volatility‚ high taxes‚ corruption and red tape. Additionally, the poor state of physical infrastructure‚ especially power supply and transport‚ is the main obstacle for establishing a business.

In an attempt to minimize the risk‚ some brands, instead of launching corporate-owned stores, are collaborating with already established local companies in the country. The local firms have a better understanding of the South African market‚ as well as logistics‚ labour and tax concerns.

Many popular apparel brands like Mango‚ Aldo‚ Montblanc‚ Pringle and Guess have partnered with local garment companies to make an easy access into an unfamiliar market. The latest to join the list is the Arcadia Group, which has partnered with Edcon and House of Busby to open Topshop and Topman franchise stores and shop-in-shops in South Africa.